Kogan share price jumps 7% on return to profit

Kogan's sales are falling but its profits are up!

| More on:
surging asx ecommerce share price represented by woman jumping off sofa in excitement

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Kogan.com Ltd (ASX: KGN) share price is storming higher on Wednesday morning.

At the time of writing, the e-commerce company's shares are up 7% to $6.24.

Why is the Kogan share price jumping?

Investors have been bidding the Kogan share price higher today following the release of the company's second-half update. Here's a summary of its performance during the half compared to the prior corresponding period:

  • Gross sales down 22.5% to $373.7 million
  • Gross margin improved 9 percentage points to 34.4% in
  • Gross profit down 3.6% to $73.6 million declined 3.6%
  • Adjusted EBITDA up 624% to $11.2 million
  • Inventory reduced 57% to $68.2 million
  • Kogan.com active customers down 31% to 2.19 million

What happened during the half?

For the six months ended 30 June, Kogan reported a 22.5% decline in gross sales to $373.7 million. Management advised that this reflects soft market conditions caused by inflationary pressures and interest rate rises, as well as the realigning of the inventory levels.

A whopping 31% decline in Kogan.com active customers to 2.19 million over the 12 months is also likely to have weighed on its performance. The question for investors to consider is whether these inactive customers are not shopping at all or have shifted to rival Amazon.

Nevertheless, thanks to a significant reduction in inventory levels, Kogan's margins have started to recover and supported its profitability.

Combined with the recalibration of its operations to the prevailing market conditions, this led to the company's adjusted EBITDA coming in at $11.2 million during the second half. This is up from $1.6 million a year earlier.

Management commentary

Kogan's founder and CEO, Ruslan Kogan, was pleased with the company's finish to the year. He said:

It has been an important year for Kogan.com as we drove efficiency through our business. Frugality, relentless pursuit of continuous improvement, data-driven decisions, and tough negotiations on behalf of our customers are all traits that are in our DNA. It's what we do day in, day out.

We know millions of customers are struggling with cost of living pressures, and we've been able to recalibrate our business to better support them in these times. Our focus on making the most in demand products and services more affordable and accessible has never been more important.

Our focus on driving efficiency in the Business means that we are now more agile than ever, with a low cost-of-doing-business, combined with a market leading offering across millions of products, and all the essential services.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Kogan.com. The Motley Fool Australia has positions in and has recommended Kogan.com. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Earnings Results

Guess which ASX All Ords stock just jumped 20%

Why are investors buying this tech stock on Wednesday? Let's find out.

Read more »

Female engineer at wind farm.
Earnings Results

Up 36% in a year, why is the AGL share price leaping higher again today?

ASX 200 investors are bidding up the AGL share price on Wednesday. But why?

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Earnings Results

CBA shares drop despite strong first-half profit result and dividend boost

Investors appear to have been wanting an even stronger result from Australia's largest bank.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Earnings Results

Evolution Mining share price storms higher on record-breaking result

This gold miner was in fine form during the first half. Here's what it reported.

Read more »

Business people discussing project on digital tablet.
Earnings Results

2 ASX 300 REITs reporting strong first-half profit growth

What did these property companies report this morning? Let's find out.

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Earnings Results

Suncorp share price jumps on strong result and $4.1b return to shareholders

This insurance giant is returning significant funds to shareholders after the sale of its banking operations.

Read more »

A woman wearing yellow smiles and drinks coffee while on laptop.
Earnings Results

CBA share price on watch after half-year profit beat

Australia's largest bank has delivered a strong result this morning. Here's what it reported.

Read more »

a female steel worker wearing a high visibility vest with her protective helmet tucked under her arm smiles as she carries a clipboard in a large warehouse of steel products.
Earnings Results

Looking at BlueScope shares? Here's your half-year results preview

What is the market expecting for the first half?

Read more »